Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Dear Sir,

I purchased a plot last month for IRS850,000.00 in India but I hv borowed IRS270,000.00 loan against mortgaging jewellery to purchase the plot, so on which amount i hv to pay zakat & is it now itself or after one year. Also i hd invested in my 2 childrn names bonds from UTI which mature after another 4yrs & its todays total value is IRS240,000.00, hv i to pay for zakat on this too. please be kind enough to reply all above.

Jazakallah khair.

Shoaib.

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Answer:

Zakah issues

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Every believer, regardless of whether man, woman, or child, who has excess wealth (over the ‘nisaab which is appx US$1,000.00) of their own, is liable to pay a 2.5% annual zakat of their nett excess wealth in Shariah.

Zakat is not determined from one’s earnings, but rather on one’s net excess wealth which is left over after paying all their expenses, and it has been in their possession for a period of one calendar year. There is no zakah liable on the house one lives in, or the furniture and fixture one uses in their house, or the car one drives, etc. But if one has property which one has bought as an investment, or spare vehicles other the one one drives, or jewelry, or any other excess asset…then zakah would be liable on these excess wealth and property.

Any asset, or wealth, or cash, or savings, which are left over after all of one’s expenses are paid, and that excess savings and wealth has been in their possession for one full calendar year is liable for payment of annual ‘zakat’ at 2.5% of its value.

Your Question: I purchased a plot last month for IRS850,000.00 in India but I hv borowed IRS270,000.00 loan against mortgaging jewellery to purchase the plot,

Beloved brother, assuming that what you listed is all your total assets, then zakah would be calculated as follows:

1. Current market value of the plot purchased = 850,000.00
2. Borrowed loan or debt = 270,000.00
3. Jewelry which has been kept now as mortgage for the loan = 300,000.00
4. The amount which you have so far invested in the ‘bonds’ = 240,000.00

Assuming that the above are your total assets and your total borrowings, the determination of zakah would be as follows:

1. 850,000 (plot) + 300,000 (the jewelry you own but kept as mortgage) + 240,000 (the amount you have so far invested in the bonds) = INR 1,390,000.00 Total Assets
2. 270,000.00 loan or Total Liabilities

Thus your Total Nett Assets would be: (Total Assets) INR 1,390,000.00 (-minus) INR 270,000 (Total Liabilities) = INR 1,120,000.00 Total Nett Assets

Assuming that your assets have been in your possession for a period of one full calendar year your zakah would be determined as: 2.5% of INR 1,120,000.00 or INR 28,000.00 for the current year.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan